The Opec oil cartel plans to cut production, but its partner Russia is resisting. Ultimately, the talks end without a deal. The "Opec +" is in the middle of the corona crisis before a stress test.
Vienna (dpa) - The Opec oil cartel and the countries cooperating with it have not managed to agree on new cuts in crude oil production beyond the end of the month. This was announced by Opec and the Russian Minister of Energy Alexander Nowak on Friday after long negotiations in Vienna.
In response to the economic consequences of the new corona virus, Opec on Thursday called for the current production limit to be tightened by 1.5 million barrels (159 liters) of oil per day. However, the attempt to put pressure on Russia and the other partners failed. Since it was also not possible to extend the current funding restriction, the 14 Opec members and the 10 cooperation partners no longer have to adhere to any limits as of April 1st. The oil price reacted to the afternoon's announcement with a significant slump.
The effects of the new corona virus will thus be a serious test for the cooperation called "Opec +". At the previous meetings, too, negotiations were long and hard, but ultimately the 24 ministers responsible were always able to agree on a compromise. Despite the failed talks this time, Opec and the Russian minister Nowak emphasized that the cooperation should continue. "There will continue to be informal meetings," the Opec livestream said. The fruitless negotiations are not a reassuring sign for the oil market.
Accordingly, the oil price continued its downward trend of the past few weeks on Friday. A barrel of Brent North Sea was cheaper than it had been in summer 2017 and at times cost less than $ 45.50 in the afternoon - more than nine percent less than the previous day. At the beginning of the year, the Brent price per barrel was still over $ 65. The prices of petrol and heating oil could therefore also fall in the coming weeks.
For the Opec heavyweight Saudi Arabia in particular, such a low oil price is also a problem with regard to the state budget. That is why the desert state has recently repeatedly declared itself willing to pay for the majority of the cuts or even to make additional, voluntary restrictions. Russia, on the other hand, has recently shown little interest in driving up the oil price through lower production.
Most recently, "Opec +" closed the oil tap in December 2019 and decided to cut production daily by a total of 2.1 million barrels compared to October 2018. Since December 2016, Verbund has repeatedly responded to the developments on the oil market with such production limits - and thus increasingly risked market shares. Opec currently accounts for a little less than 30 percent of global oil production, a few years ago the share was significantly higher. The larger round of "Opec +" currently represents around 45 percent of global crude oil production.
It will be exciting to see whether oil production in the 24 countries will increase significantly due to the lack of agreement. Because actually the oil exporters are faced with great reluctance to demand. Numerous experts and organizations are now assuming that the demand for crude oil will rise much more slowly than expected - or could even decrease. The influence of the corona virus on the global economy is already clearly noticeable here, and Friday was also not very successful on the stock exchanges.
"The demand for crude oil has dropped significantly. Kerosene is doing extremely poorly," said Rainer Seele, head of the Austrian energy group OMV, the "Kleine Zeitung" (Friday) from Styria. "Not only the airlines suffer, the refineries too." Lufthansa announced that it would cut its flight schedule even further due to the spread of the corona virus.
